Taxation of Russian Branches

The Federal Commercial Court of the Moscow District has ruled that the Russian branch of CMS Cameron McKenna has to pay additional $1 million in taxes, interest and penalties.

The Court of Cassation has handed down the verdict that the cost of services rendered by the CMS’s London office was not a deductible expenditure of the Moscow branch but income of the head office in London. Consequently, a 20% tax on profits of a foreign organization operating in Russia through a permanent establishment was due.